Portugal Payroll Solutions

Contractors in Portugal can be set up in 2 ways, Employed and Self Employed.

Contractors can be engaged in Portugal as employees or self-employed in both cases all income is fully declared in country.

This is the most compliant type of engagement in country.

Self-employment may be possible for contractors when they are truly independent contractors who will typically provide services independently. To qualify as a self-employed person, the typical criteria will be economic independence; freedom to determine his/her own activities, working hours and place of work; use their own equipment; hire assistants or arrange substitutes.

Tax year – The tax year is the calendar year for individuals

Immigration – Nationals of other EU/EEA and Switzerland need to obtain a certificate of registration of a Citizen of the European Union issued by the City Council of the person’s area of residence.

From 1 January 2021, UK nationals are considered a citizen of a third state, so they have to apply for a visa referring to the specific situation: work, family reunification etc.

Workr Fees – €575 per month plus €350 set up fee. This applied to both the employed and self-employed solutions

Employment Summary

Registration – Workr will arrange statutory insurances. Each worker must apply directly to the Finances department and Social Security department to obtain their tax and social security numbers. Workr will assist with this application. A fixed address and Portuguese bank account is required to complete registration and receive payments.

Contract – Open-ended contracts are the norm in Portugal.

Employers social security – contributions are approximately 23.75%.

Employees social security – contributions are 11%

Tax – Income tax which is progressive and ranges from 14.5% to 48%

Benefits – Holidays: The employee is entitled to 22 days of vacations after 1 year contract duration; until 1 year, he is entitled to 2 days/ month, after 6 months work.

Self-Employment Summary

Registration – Workr will register the contractor for tax, social security and VAT with the assistance of a fully qualified local accountant.

Contract – Open-ended contracts are the norm in Portugal.

Social Security – If you are self-employed, you are responsible for making your own social security contributions. While
employed workers’ contributions are topped up by payments from their employers, those who are self-employed have to pay the full contribution themselves which is 29.6%.

Tax – Income tax which is progressive and ranges from 14.5% to 48%

Benefits – Genuine business expenses associated with the production of income such as, telephone, computer,
professional literature, own tools, travel and the deduction for a second home may be allowed under certain conditions.

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